How does the new Loan Officer Compensation affect YOUR buyer/seller?

There is. Basically (although unbelievably convulated and confusing) the new legislation says that borrowers have 2 options. EITHER to pay their loan origination fee OR to accept a higher interest rate and have the lender paid the loan origination fee. Seems simple, right?

Here's where YOU, as their realtor, come in. Does the loan officer that your buyer is obtaining their loan from, even have TWO options? Many lenders are adopting ONLY the lender compensation and ONLY offering the higher rate option to your client. IF you buyer is unaware that their are two options available to them, they may not know to ask or search for another loan officer (me).

Keep in mind, many times a lender paid, higher rate option works best. My job is to ensure that BOTH are presented to the borrower so, through analysis, we can determine which is best.

Also, on the lender paid option, most lenders have adopted a MINIMUM amount in order to ensure the loan officer receives adequate compensation regardless of the loan amount. HOWEVER, the lender may have to increase the interest rate, considerably, in order to pay the minimum compensation to the loan officer, again dramatically impacting the quality of the loan for the borrower.

On another note, the new Loan Officer Compensation does NOT allow for ANYONE to pay for ANY additional costs associated with the loan OTHER than the borrower. This typically comes up under lock extensions. IF a loan needs to be extended at a cost, the buyer is the ONLY one that can pay that expense. NOT the loan officer. NOT the realtor. Regardless of WHY the lock needs to be extended AND given that this is a new expense, the buyer will need to re-disclosed this expense (with mandatory disclosure times) which could affect your close of escrow date.

Just be aware. Ask questions. If your business is referral based as mine is, it is critical we are advisors for our clients not just transactional.

Additional Information

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